Culinarian's Previous Promotion

Based on the case, I don't think the previous promotion accomplished the goals set out by the CEO, Audrey Roux. She set four strategic priorities for the company (1) widen its distribution network, (2) increase its market share of the premium cookware segment, (3) preserve its prestigious image and (4) continue to capture revenue growth of at least 15%, while maintaining pretax earnings margins 12%.

First, from the response cards it seems to be pretty clear that the the promotion was used by a very large number of previous Culinarian customers. 80% is very large percentage and means that the company didn't really broaden its customer base. Also noting that Culinarian is a premium brand the additional customers that the company did attract through this promotion are likely to not be individuals that will repurchase without the price promotion incentive. These are probably not typical "Culinarian" customers and are unlikely to be as profitable as regular customers over the long term for the company. This fact is reinforced by 70% positive response on the importance of price discounts in their purchase decisions.

Also without complete buy-in from the retailers, this promotion did not reach as far into the consumer mindset as Culinarian originally anticipated. It seems as though many of the retailers just preordered stock for future months in order to take advantage of the discount instead of passing it along to the consumers. Also, since Culinarian was relying on the retailers to do the promotion of this discount, the message was driven by the retailer and therefore wasn't highlighted by those firms that were simply stocking up instead of pushing the product out. Saturation of the branding and messaging in the larger advertising and communications market was less than anticipated.

I also think that the price reductions on product other than clearance items dilutes the luxury brand equity that Culinarian has worked hard to establish. By diminishing this cache, Culinarian walks a delicate line that could possibly put them in no man's land in the market. They run the risk that despite the quality of the product, the consumer automatically discounts the product by the previous price promotion amounts. Production costs are likely to remain the same and customers will be unwilling to pay a fair price. This would be a difficult situation to reverse and certainly wouldn't help them gain premium cookware market share.

All things considered, I think it is probably true that the price promotion did more harm than good. While we can debate the merits of the consultant analysis, the fact is that regardless of the financial outcome, this promotion didn't achieve the goals set out by the CEO. The price promotion might have momentarily appeased the trade, but it has established an expectation for future discounts that might be harder to turn back from. This promotion was not profitable or successful.